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Supplier Diversity Blog by supplier.io

Stop Explaining Why Diversity is Important

Last month, new research was unveiled in a Harvard Business Review article that has the potential to completely transform how we talk about supplier diversity.

Written by Oriane Georgeac and Aneeta Rattan, the article summarized the impact that three different kinds of justifications for diversity and inclusion had on the opinions of prospective employees from traditionally underrepresented communities. 

Those justifications were:

  • Business case: We invest in diversity because we believe it improves our bottom line and operational resilience.
  • Fairness case: We invest in diversity because it is the right thing to do.
  • Neutral case: We invest in diversity—period.

The results were abundantly clear: Job candidates were twice as likely to be concerned that they would be stereotyped, seen as “interchangeable,” or simply not fit in at companies that used a business case justification for increasing the diversity of their workforce. 

According to the authors, candidates were uncomfortable with their personal characteristics being evaluated as business assets, especially because their actual experience and qualifications were likely to be diminished as a result.

Interestingly, the neutral case was found to be the most effective of all. Simply stating that diversity is important created the greatest sense of potential for belonging and acceptance.

In order to apply these findings to supplier diversity programs, we must assume that job candidates are an acceptable stand-in for prospective suppliers. But it is not just suppliers that supplier diversity programs have to appeal to. In many cases, mission and vision statements are aimed at budget holders and customers as well.

How might a neutral justification for supplier diversity work in practice?

Connecting with Prospective Suppliers

As reported in the 2021 State of Diverse Suppliers report, 85 percent of respondents indicated that they pursued diversity certifications because they saw it as an avenue to increase sales opportunities. Knowing that a company has a supplier diversity program is all these suppliers need. 

If they are competitive in their market, these suppliers know it is thanks to their dedication and core capabilities, not their identity. Being transparent about this from the outset positions suppliers and buying companies as more closely aligned than if buyers seem to be on a social mission while suppliers are focused on closing deals.

Enhancing Customer Perception of Brand Value

The market a company is in and whether they are B2B or B2C will impact the interest their customers have in the justification for their supplier diversity program. B2B customers are most likely to be interested in the existence of a program, especially if they have a tier 2 supplier diversity program in place.

Personal consumers are most likely to be motivated by how they perceive the role of diversity playing out in the culture of the companies they buy from. And, in truth, very few words are needed. We need look no further than the companies who change their logos to a rainbow for Pride Month as evidence that knowing a program is in place is more important than why.

Gaining Budget Holder Buy-In

One of the challenges procurement has always faced is that while they own the metrics for supplier diversity, they do not get to decide which suppliers will receive contracts. That is up to the budget holder and stakeholder team. 

It may be easier for procurement to gain buy-in for awarding some of the business to a diverse-owned business when it is a straightforward policy. The alternative is convincing budget holders that the company’s justification, whether it is based on business case or fairness, should be more motivating than their desire to partner with a specific supplier.

In reviewing the objections shared by job candidates for the Harvard Business Review article, I recognize a concern that is shared by many certified-diverse business owners: the fear of the “box check.” If that is the case, then the answer to the question of how companies can improve the effectiveness of supplier diversity program messaging is the same as the way to win over job candidates from underrepresented groups: a neutral justification. 

Companies should be clear that there is a supplier diversity program in place—period—and then let their results speak for themselves.

State of Supplier Diversity

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The team has a long history in driving innovative solutions in supplier diversity. We believe that companies deserve solutions that are effective and provide measurable value and results. Started more than a decade ago, supplier.io has rapidly become a prominent provider of supplier diversity solutions to leading corporations. We currently support customers in automotive, healthcare, insurance, retail, manufacturing, education, and banking. One in five Fortune 50 company relies on supplier.io.